Fraud prompts crackdown on property tax exemption

Millions must re-apply for Basic STAR

New state legislation enacted this year will ask 2.6 million homeowners receiving property tax exemptions on school taxes to re-register with the New York State Tax Department in order to keep receiving them in the future.

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By James Nani

recordonline.com

By James Nani

Posted Sep. 9, 2013 at 2:00 AM

By James Nani
Posted Sep. 9, 2013 at 2:00 AM

Basic STAR

Available for owner-occupied, primary residences where the income of resident owners and their spouses is less than $500,000 and exempts the first $30,000 of the full value of a home from school ta...

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Basic STAR

Available for owner-occupied, primary residences where the income of resident owners and their spouses is less than $500,000 and exempts the first $30,000 of the full value of a home from school taxes.

Source: New York State Department of Taxation and Finance

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New state legislation enacted this year will ask 2.6 million homeowners receiving property tax exemptions on school taxes to re-register with the New York State Tax Department in order to keep receiving them in the future.

And for the millions who will need to reapply for the Basic School Tax Relief exemptions, or STAR, the savings are nothing to sniff at.

In 2010-2011, STAR provided almost 3.4 million exemptions that saved homeowners an average of $641, according to a state Comptroller's Office audit from February.

The School Tax Relief program, started in 1998, aims to ease the burden of school taxes for homeowners.

New York then makes up the difference to schools through state aid. That makes it the only real property tax exemption where the tab is picked up by the state, as opposed to shifted to other homeowners.

Like other state costs over the years, the price tag for such programs has ballooned.

When STAR started in 1998-1999, the state was paying back $582 million. That jumped to $3.2 billion in the 2010-11 fiscal year, according to the state Comptroller's office. Over 13 years, actual state disbursements for the program totaled $37.6 billion.

But what's prompted the new legislation is not ballooning costs, but reported abuses. The exemptions are only available for an individual's or family's primary residence.

But according to the state comptroller, not everyone has been playing by the rules. New York lost $13 million in the 2010-11 fiscal year because of improper exemptions and double dippers, a comptroller's report said. The comptroller also projected the state would lose an additional $73 million through the 2015-16 fiscal year.

The re-registration process is an attempt to stem those problems. Though local assessors monitor the program, there's currently no way to know if a homeowner is claiming an exemption in another municipality. The Tax Department will use the information provided to review STAR eligibility for 2014 and future years by matching the exemption to someone's Social Security number.

State Tax Department spokesman Geoffrey Gloak said reapplying will be quick and painless by letting people apply via phone, online or by mail.

State legislators and tax representatives are also working to get the word out. Letters with more information will go out this week to those in our region who receive the benefit.

But even though the process will be administered by the state tax department, local assessors are gearing up for questions or problems.

"Anytime there's a change, we get a phone call," said Lynda Levine, director of Sullivan County's Real Property Tax Services.

And the current system is not without flaws. For years, Ron and Pat Epstein of Saugerties turned in their Enhanced STAR form every year without a problem. Enhanced STAR is available to senior homeowners 65 or older with an adjusted gross income under the state-specified limit.

Living on a fixed income, the STAR exemption helped smooth out the couple's tax burden.

But this year, Ron said he had to spend the first half of the year taking care of his wife as she got ill and ultimately died. Only when his property tax bill came in the mail did he think of the form, he said.

But by then, Epstein said, it was too late. When he tried to see if he could so something about it, he said he was told he was out of options. There was no appeal process and no tax exemption for this year. Just a grievance day that he already missed.

"I'm not making excuses for not giving the form," Epstein said. "But the law doesn't make any provisions for hearing an appeal. Even a man in jail, an assassin, can appeal."

Assemblyman Pete Lopez, R-Schoharie, said STAR exemptions play a huge role in people's pocketbooks. And he said he's seen people who have missed filing for STAR exemptions because of things like heavy floods in past years.

Though Lopez said he's drafting legislation that would let those who get Enhanced STAR argue their cases to the state, he said he's concerned some people may not realize this year they need to reapply for Basic STAR exemptions until it's too late.

"They won't realize until they pick up their school tax bill and have a heart attack," Lopez said.